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UTSA Financing Risk Management John DeLaHunt, MBA, ARM UTSA Risk & Life Safety Manager April 22, 2009 1 Business Affairs: Your Partner for Successful Solutions.

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Presentation on theme: "UTSA Financing Risk Management John DeLaHunt, MBA, ARM UTSA Risk & Life Safety Manager April 22, 2009 1 Business Affairs: Your Partner for Successful Solutions."— Presentation transcript:

1 UTSA Financing Risk Management John DeLaHunt, MBA, ARM UTSA Risk & Life Safety Manager April 22, 2009 1 Business Affairs: Your Partner for Successful Solutions

2 Often—FREQUENCY—Rare Minor ——— SEVERITY ——— Major Risk Mapping Paper Cuts Bird Attacks Warfare Auto Fatality MANAGE AVOID TOLERATETRANSFER Business Affairs: Your Partner for Successful Solutions 2

3 Integrated Risk Management: A Three Legged Stool 1.Loss Prevention 2.Loss Control 3.Risk Finance - and - 4.Business Continuity Business Affairs: Your Partner for Successful Solutions 3

4 CostCapacity NakedLow Self-InsuranceLowModerate Risk PoolingModerate CommercialHigh Risk Finance Strategies Business Affairs: Your Partner for Successful Solutions 4

5 Policies in Place for People Workers Compensation (WCI) * Unemployment Compensation (UCI) * Directors & Officers (D&O) * Commercial Crime * 2008 Premiums$326,632 2009 Premiums (estimated)$374,456 * Offered through UT System to all UT institutions (“System Coverage”) 5 Business Affairs: Your Partner for Successful Solutions

6 Policies in Place for Property Real Property (CPPP)* Vehicles (liability, physical damage, etc)* Scheduled equipment* Fine Arts* Mobile equipment * Offered through UT System to all UT institutions (“System Coverage”) 2008 Premiums$235,366 2009 Premiums (estimated)$242,682 6 Business Affairs: Your Partner for Successful Solutions

7 Policies in Place for Events Supplemental Excess General Liability –Festivals (Texas Folklife, Asian) Tenant User Liability Insurance Program –Joint Sponsored events Sports Camp Insurance CoA Design/Build Accident Policy 2008 Premiums$35,540 2009 Premiums (estimated)$35,540 7 Business Affairs: Your Partner for Successful Solutions

8 UTSA Insurance Premiums 2008 2009 (estimated) People (WCI, UCI, D&O, Crime) $326,632$374,456 Property (CPPP, Auto, Mobile Equipment, Equipment) $235,366$339,532 Liability (Festivals, TULIP, Camps, D/B) $35,540 Total$558,848$713,987 8 Business Affairs: Your Partner for Successful Solutions

9 UTSA Cost of Risk 9 Business Affairs: Your Partner for Successful Solutions

10 CPPP Fire/AOP Structure LossFinancing up $1B No Coverage $1B $5M Commercial Insurance $5M $250k 50% institution w/loss (5 yr amortization) 50% all other institutions (5 yr amortization) $250k $0 Deductible – institution w/loss 10 Business Affairs: Your Partner for Successful Solutions

11 CPPP Wind & Flood Structure LossFinancing Up $150M No Coverage $150M $50M Commercial Insurance $50M $250k 40% Debt Svc Institution w/loss (20-30 yr amort.) 60% Debt Service All other institutions (deferred capitalization on property fund, 20-30 yrs) $250k $0 Deductible (institution w/loss) 11 Business Affairs: Your Partner for Successful Solutions

12 UTSA Fire/AOP Cash Flows $0 Year 0 -$250 Year 2Year 1Year 4Year 3Year 5 Following Catastrophic Property Loss (thousands of dollars) -$475 -$25 UTSA suffers the loss Any sister institution suffers the loss -$25 -$475 12 Business Affairs: Your Partner for Successful Solutions

13 Unfunded Deductibles CPPP - Fire/AOP and W&F Exposure –Property loss >$250k Deductible if UTSA suffers the loss –$250k per occurrence, both programs Fire/AOP Replenishment over 5 years –$475k per year if UTSA suffers the loss –~$25k per year if another campus suffers the loss W&F Debt Service over 20-30 years –$20M if UTSA suffers the loss –~$1.5M if another campus suffers the loss 13 Business Affairs: Your Partner for Successful Solutions

14 Unfunded Deductibles Employment Practices Exposures –Wrongful Termination –Harassment/Retribution –Denial of Tenure –Civil rights actions –Other federal causes Deductibles –$100,000 individual per occurrence –$300,000 institution per occurrence 14 Business Affairs: Your Partner for Successful Solutions

15 Unfunded Retention Tort Liability Exposures –Premises defect –Tangible personal property –Motor-driven equipment Limit of Liability – fully retained –$250,000 individual, per occurrence –$500,000 limit to individuals, per occurrence –$100,000 property damage –$600,000 total 15 Business Affairs: Your Partner for Successful Solutions

16 Unfunded Exposures Summary ProblemInsuranceExposure Property Loss to UTSA - Fire/AOP CPPP $250k Deductible $475k Fund Replenishment for 5 yrs Property Loss to UTSA - Wind and Flood CPPP $250k Deductible 20-30 yrs debt service on $20M Property Loss in system - Fire/AOP CPPP ~$25k Fund Replenishment for 5 yrs Property Loss in system - Wind and Flood CPPP 20-30 yrs debt service on ~$1.5M Deferred Capitalization Employment PracticesD&O $100k individual $300k institution Tort Liability $250k Per person $500k Per occurrence $100k Property Damage 16 Business Affairs: Your Partner for Successful Solutions

17 UTSA Scheduled Equipment Coverage 17 Business Affairs: Your Partner for Successful Solutions

18 Ideas Build catastrophic property loss reserve –Immediately fund $725K to avoid disruptions for one budget cycle –Fully fund $2.625M to avoid all disruption due to property loss Premium and reserve sharing analysis 18 Business Affairs: Your Partner for Successful Solutions

19 Ideas Build liability reserve –Tort liability: $600k cap –D&O deductible: $100k/$300k –Immediately: $600k (assumes 1 loss per year) Premium and reserve sharing analysis 19 Business Affairs: Your Partner for Successful Solutions

20 Ideas Build hybrid equipment protection program –Insure high-value, unique, exposed assets –Insure fee-funded assets –Immediately: ↑ insurance coverage –Immediately: $50k loss retention pool –Target: $100k premium cost –Target: $300k loss retention pool Premium and retention sharing 20 Business Affairs: Your Partner for Successful Solutions

21 Ideas Combine retention pools –Short term target: $725K –Long term target: $3M Add retention pool to insurance budgets Centralize management of risk retention (losses) and risk transfer (insurance) 21 Business Affairs: Your Partner for Successful Solutions

22 UTSA Financing Risk Management John DeLaHunt, MBA, ARM UTSA Risk & Life Safety Manager April 22, 2009 22 Business Affairs: Your Partner for Successful Solutions


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